On Monday, the Securities and Exchange Commission voted to lift its ban on short selling and raise the maximum short-selling margin permitted to 25 percent from 10 percent.
The move was prompted by a recent spike in the value of the cryptocurrency, which has seen it climb to more than $2,000 from around $100 on Tuesday.
But there are a number of other factors at play, such as the fact that the SEC has recently been trying to reduce its exposure to hedge funds and other companies that trade bitcoin for other assets.
“The SEC will now have a greater role in protecting investors from short selling in a volatile market,” said John C. Bogle, the former chairman of the SEC, in a statement.
“The SEC is not a market maker or a financial institution.
It is simply a market monitor, and its role is to help protect investors by taking actions that protect their interests.”
The move was welcomed by some bitcoin supporters, including Mark Frieden, the CEO of Coinbase.
The firm has been a pioneer in the space of bitcoin futures contracts and also allows customers to place their bets on the future price of bitcoin, or other cryptocurrencies.
“I applaud the SEC for its bold move to reexamine and tighten restrictions on short-sellers and other manipulative activity in the market,” Frieden wrote on his Twitter account on Tuesday, referring to the SEC’s decision.
“I applaud regulators for taking a stand against manipulation of the bitcoin market.”
The SEC’s move to allow a more extensive range of margin trading is likely to be a boon to bitcoin traders.
According to the Wall Street Review, bitcoin futures were introduced last month by the Chicago Mercantile Exchange and New York Mercantier Exchange.
The futures contracts allow investors to place a short bet on bitcoin prices, and a firm is allowed to pay the trader a fee based on the margin it has received.
“We believe this regulatory change will help facilitate trading and support the growth of bitcoin derivatives and asset classes,” CME Group Inc. Chief Executive Officer Terry Duffy told Bloomberg in a recent interview.
“This move is consistent with our long-term strategy to help bitcoin become a more widely accepted and widely traded asset class,” Duffy said.
“We believe the rules should allow for this kind of activity.”
The Wall Street Times also said the SEC will allow hedge funds to take advantage of the new rules by trading bitcoin futures, which were originally intended to help hedge funds compete with retail investors.
However, the moves comes at a time when the SEC is still grappling with a number issues with bitcoin and its price.
The SEC on Monday voted to fine a bitcoin trading company, Mt.
Gox, for allowing customers to bet against the price of a bitcoin cryptocurrency.
The agency also announced that it will consider imposing additional regulation on the digital currency, including imposing restrictions on how much trading can occur.
While the SEC did not explicitly ban short-sale trading, the agency said that the company violated its own rules.
The SEC said that Mt.
Gox “failed to maintain accurate, complete and timely records of transactions in bitcoin and failed to provide timely notification of the transaction history of the account holder.”
It said the company also failed to protect its customers from losses if they lost money.
In a statement, Mt:Gox said it would review its position and will “evaluate its next steps in the case.”